It’s Falling Apart: Reflation Trade Shrivels Up And Dies As Markets Sour On Risk

Well, the dollar is under pressure on Monday, just as we said it would be on Sunday evening. The Bloomberg Dollar Spot Index fell as traders digested the failure of the GOP health care bill on Friday. This is the index’s eighth drop in the last nine days, and as Bloomberg notes this morning, “further losses of…

“Trump’s Political Capital Is Getting Consumed”: One Simple Trade Idea For The Week Ahead

Think about the events that transpired over the last two weeks. Now think about them in terms of the following two frameworks for how things could have gone. Fed comes out hawkish, guns ablazin’, Geert Wilders puts up a better-than-expected showing in the Dutch elections, the GOP health care bill moves forward Fed comes out…

Finally Friday: Oil Looks For Weekly Gain; EM, Euro Surge; Merkel Meets America’s Useful Idiot

Well, it’s quiet out there as an exceptionally eventful week (finally) winds down. As we head into the weekend, oil is trying to eek out a gain on the week, after a surprise inventory draw (reported first by API on Tuesday and then confirmed a day later by the weekly EIA print) shored up a…

The First Week Of The Rest Of Your Life

Welcome to the first week of the rest of your life. By now you all know what’s coming and if you don’t, well, you can review the HR weekend reading or you can simply scan the short version here. Overnight, the action found the dollar adrift (although it did bounce a bit later in the…

“WAM!” The “Holy Schatz” Mystery Is Solved

Recall last month’s “holy Schatz!” drama. The front end of the German curve richened materially on a combination of i) ECB buying below the depo rate, and ii) a safe haven bid attributable to French election risk. This created all manner of aberrations and distortions, including but (probably) not limited to, i) iTraxx Main trading…

No Trouble In Little China And Nothing Doing In Oz

It was a relatively quiet overnight session on the news front, although you wouldn’t know it from the number of Bloomberg e-mails in my inbox. China’s FX reserves “unexpectedly” rose in February although I’m not entirely sure why everyone is using the term “unexpectedly” here. Have you heard much lately about the yuan? No? Exactly.…

Beware The German “Hump”

I’ve talked tirelessly (well, I haven’t gotten tired of it, maybe you have) about the extent to which markets are or aren’t correctly pricing event risk around Europe’s trio of electoral trials by fire. For obvious reasons, the French elections have gotten the most attention. That’s probably justified given the fact that there’s a non-negligible…

Can Someone Please Explain This Schatz?!

We need to know the extent to which the Schatz spread to 2Y French govies is an indication of investors trying to price redenomination risk around a prospective Marine Le Pen win. That is, we need to understand how closely we should be watching the German curve as a barometer of political risk.